SECURITY AGREEMENT


This SECURITY AGREEMENT dated as of December 31,
1996, is made by VANGUARD AIRLINES, INC., a Delaware
corporation having its principal place of business
at 30 N.W. Rome Circle, Mezzanine Level, Kansas City
International Airport, Kansas City, Missouri, 64153
("Grantor"), in favor of HAMBRECHT & QUIST,
CALIFORNIA, a wholly owned subsidiary of Hambrecht &
Quist Group ("Lender").

RECITALS

A.   Corporation has requested that Lender arrange
for the initial issuance of (i) a letter of credit
to be issued in favor of Boatmen's POS Merchant
Services Co., L.L.C. for the account of the
Corporation in the aggregate amount of Four Million
Dollars ($4,000,000) (the "Letter of Credit.")

B.   Corporation intends to switch credit card
processors from Boatmen's POS to Michigan National
Bank.  Corporation intends to request Lender to
arrange for the issuance of a letter of credit in
favor Michigan National Bank up to the aggregate
amount of Four Million Dollars ($4,000,000)
(collectively with the "Letter of Credit" referred
to in Recital A above, the "Letters of Credit") upon
the reduction and/or cancellation of the letter of
credit, referred to in Recital A above, to be issued
in favor of Boatmen's POS.
 
C.   Substantially concurrently herewith Grantor and
Lender have entered into that certain Reimbursement
Agreement dated as of December 31, 1996 (as the same
may from time to time be amended, modified,
supplemented or restated, the "Reimbursement
Agreement") whereby Grantor has agreed to reimburse
Lender in full for any an all drawings made under
the Letter of Credit.

D.   Lender is willing to arrange for the issuance
of the Letters of Credit, but only upon the
condition, among others, that Grantor shall have
executed and delivered to Lender this Security
Agreement in order to secure Grantor's obligations
to Lender under and in connection with the
Transaction Documents (as defined herein).


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AGREEMENT

NOW, THEREFORE, in order to induce Lender to arrange
the Letters
of Credit, enter into the Reimbursement Agreement
and for other good and valuable consideration, the
receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound,
Grantor hereby represents, warrants, covenants and
agrees as follows:

1.   DEFINED TERMS.  Unless otherwise defined herein
the following terms shall have the following
meanings (such meanings being equally applicable to
both the singular and plural forms of the terms
defined):

"ACCOUNTS"  means (i) any and all accounts or other
distributions acquired by, owned by, owed to or
payable to Grantor in any manner, whether now
existing or hereafter acquired, in connection with
the Boatmen's Merchant Agreement or the MNB Merchant
Agreement and (ii) all rights to payments
(including, without limitation actual collections
held by MNB Bank and Boatmen's POS, in connection
with any Credit Card transactions), from Cardholders
or card issuers, whether now existing or hereafter
acquired, in the AMOUNT OF AND AS A RESULT of such
CHANGES, and, which with respect to each case (i)
and (ii) above, shall include, without limitation,
accounts receivable, book debts and other forms of
obligations now owned or hereafter received or
acquired by or belonging or owing to Grantor
(including, without limitation, under any trade
name, style or division thereof) WHETHER ARISING OUT
OF GOODS SOLD or services rendered by Grantor or
from any other transaction, whether or not the same
involves the sale of goods or services by Grantor
(including, without limitation, any such obligation
which may be characterized as an account or contract
right under the UCC) and all of GRANTOR'S RIGHTS IN,
TO AND UNDER ALL PURCHASE orders or receipts now
owned or hereafter acquired by it for goods or
services, and all of Grantor's rights to any goods
represented by any of the foregoing (including,
without limitation, unpaid seller's rights of
rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or
repossessed goods), and all monies due or to become
due to Grantor under all purchase orders and
contracts or other agreements for the sale of goods
or the performance of services or both by Grantor
(whether or not yet earned by performance on the
part of Grantor or in connection with any other
transaction), now in existence or hereafter
occurring, including, without limitation, the right
to receive the proceeds of said purchase orders and
contracts, and all collateral security and
guarantees of any kind given by any Person with
respect to any of the foregoing;

"ACCOUNT DEBTOR" means any "account debtor," as such
term is defined in Section 9-105(1)(a) of the UCC,
including, without limitation, all Cardholders.
<PAGE>
"ACT OF BANKRUPCY" shall have the meaning assigned
to such term in Section 1.1 of the Reimbursement
Agreement.

"BOATMEN'S MERCHANT AGREEMENT" means that certain
Merchant Agreement between KBC Card Services (a
division of Bank IV, Kansas) and Vanguard as amended
by the Addendum to KBC Card Services Merchant
Agreement between KBC Card Services and Vanguard
effective as of November 18, 1996 and the
Modification and Pledge Agreement by and between
Vanguard, Boatmen's National Bank, successor by
merger as of October 18, 1996, to Bank IV Kansas,
N.A., and Boatmen's POS Merchant Services Co.,
L.L.C. effective as of January 1, 1997 and attached
as EXHIBIT F to the Reimbursement Agreement, as the
same may from time to time be amended, modified,
supplemented or restated.
     
"BOATMEN'S POS"  shall mean Boatmen's POS Services
Merchant Co., L.L.C., a limited liability company.

"CREDIT CARD"  shall have the meaning assigned to
such term in Section 1 of the MNB Merchant Agreement
or the meaning assigned to the term "Purchase Card"
in the Boatmen's Merchant Agreement, whichever is
applicable.

"CARDHOLDERS" shall have the meaning assigned to
such term in Section 1 of the Boatmen's Merchant 
Agreement or Section A of the MNB Merchant
Agreement, whichever is applicable.

"CHATTEL PAPER" means any "chattel paper," as such
term is defined in Section 9-105(1)(b) of the UCC,
now owned or hereafter acquired by Grantor.

"COLLATERAL"  shall have the meaning assigned to
such term in SECTION 2 of this Agreement.

"CONTRACTS" shall mean all contracts, undertakings,
franchise agreements or other agreements in or under
which Grantor may now or hereafter have any right,
title or interest with respect to an Account, any
agreement relating to the terms of payment or the
terms of performance with respect to an Account,
including, without limitation, the MNB Merchant
Agreement and the Boatmen's Merchant Agreement.

"DEPOSITS" shall mean cash, Instruments, Documents
or Chattel Paper or any other securities, including,
without limitation, the Letters of Credit, now
existing or hereafter received, acquired or arising,
deposited by or on behalf 

<PAGE>
of Grantor with MNB Bank and Boatmen's POS, all
additions thereto from time to time and all monies,
securities investments and instruments purchase 
therewith and all interest, profits and/or dividends
accruing thereon and proceeds thereof, all of the
foregoing held by MNB Bank and Boatmen's POS in an
account or otherwise, whether or not within MNB Bank
or Boatmen's POS sole dominion or control, relating
to the payment and/or performance by Grantor of its
obligations to Bank under or in connection with the
MNB Merchant Agreement and Boatmen's Merchant
Agreement.

"DOCUMENTS" shall mean any "documents," as such term
is defined in Section 9-105(1)(f) of the UCC, now
owned or hereafter acquired by Grantor.

"EVENT OF DEFAULT" means any of the following:

(A)  Failure by Grantor to pay, distribute or
otherwise perform the Secured Obligations;

(B)  Grantor's failure in any material respect to
perform or observe any term, covenant or agreement
contained herein or in any of the Transaction
Documents;

(C)  Any warranty, representation or statement made
or furnished to Lender by or on behalf of Grantor
under this Security Agreement or any Transaction
Document is or proves false or misleading in any
material respect either now or at the time made;

(D)  An Act of Bankruptcy; or

(E)  The occurrence of (or with the giving of
notice, lapse of time, determination of materiality
or the fulfillment of any other applicable condition
or any combination of the foregoing, might
constitute) a default under, or the termination of,
the MNB Merchant Agreement.

"GROSS EXPOSURE" shall mean the sum of (i) Gross
Exposure, as such term is defined in Section C of
Amendment to the MNB Merchant Agreement by and
between Vanguard and MNB, dated as of December 31,
1996, and also (ii) the amount sufficient to secure
all obligations of Vanguard to Boatmen's POS under
the Boatmen's Merchant Agreement.

"INSTRUMENTS" means any "instrument," as such term
is defined in Section 9-105(1)(i) of the UCC now
owned or hereafter acquired by Grantor, including,
without limitation, all notes, certificated
securities, and other evidences of indebtedness,
other than instruments that constitute, or are a
part of a group of writings that constitute, Chattel
Paper.
<PAGE>
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security
interest, encumbrance, levy, lien or charge of any
kind, whether voluntarily incurred or arising by
operation of law or otherwise, against any property
of Grantor, including any agreement to grant any of
the foregoing, any conditional sale or other title
retention agreement, any lease in the nature of a
security interest, and the filing of or agreement to
file or deliver any financing statement (other than
a precautionary financing statement with respect to
a lease that is not in the nature of a security
interest) under the UCC or comparable law of any
jurisdiction.
     
"MNB BANK" means Michigan National Bank, a national
banking association, with its principal office
located at 77 Monroe Center, Grand Rapids, MI 49503.

"MNB MERCHANT AGREEMENT" means an Agreement between
Michigan National Bank and Vanguard Airlines, Inc.,
that may be entered into with respect to credit card
processing services, as the same may from time to
time be amended, modified or restated.

"PERMITTED LIEN" means (a) any lien in favor of
Lender granted hereunder or arising under any of the
Transaction Agreements to secure the Secured
obligations and (b) any interest in the Pledged
Collateral securing a credit to Grantor which is
listed on SCHEDULE III attached hereto and
incorporated herein by this reference.

"PERSON" means any individual, sole proprietorship,
partnership, limited liability company, joint
venture, trust, unincorporated organization,
association, corporation, institution, public
benefit corporation, firm, joint stock corporation,
estate, entity or governmental agency.

"PROCEEDS" means "proceeds," as such term is defined
in Section 9-306(1) of the UCC and, in any event,
shall include, without limitation, (a) any and all
accounts, Chattel Paper, Instruments, cash or other
proceeds payable to Grantor from time to time in
respect of the Collateral, (b) any and all proceeds
of any insurance, indemnity, warranty or guaranty
payable to Grantor from time to time with respect to
any of the Collateral, (c) any and all payments (in
any form whatsoever) made or due and payable to
Grantor from time to time in connection with any
requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral
above by any governmental body, authority, bureau or
agency (or any person acting under color of
governmental authority), and (d) any and all other
amounts from time to time paid or payable under or
in connection with any of the Collateral.

<PAGE>
"REIMBURSEMENT LOANS" shall have the meaning
assigned to such term in Section 1.1 of the
Reimbursement Agreement.

"REIMBURSEMENT LOAN NOTE" shall have the meaning
assigned to such term in Section 1.1 of the
Reimbursement Agreement.

"SECURED OBLIGATIONS" means all loans, advances,
debts, liabilities and obligations, for monetary
amounts owed by Grantor to Lender whether due or to
become due, matured or unmatured, liquidated or
unliquidated, contingent or non-contingent, and all
covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not
evidenced by any note, agreement or other
instrument, arising under the Transaction Documents. 
This term includes, without limitation, all
principal, interest (including interest that accrues
after the commencement of a case against Grantor or
any affiliate of Grantor under the Bankruptcy Code),
fees, including, without limitation, any and all
closing fees, prepayment fees, commitment fees,
advisory fees, agent fees and attorneys' fees and
any and all other fees, expenses, costs or other
sums chargeable to Guarantor under any of the
Transaction Documents.

"SECURITY AGREEMENT" means this Security Agreement
and all Schedules hereto, as the same may from time
to time be amended, modified or supplemented.

"TRANSACTION DOCUMENTS" means, collectively, this
Security Agreement, the Reimbursement Agreement, the
Reimbursement Loan Note, and any other agreement
entered into between Grantor and Lender, and any
certificate or instrument executed by Lender, in
connection with said agreements and note, as the
same may from time to time be amended, modified,
supplemented or restated.

"UCC"  means the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of
California; PROVIDED, HOWEVER, in the event that, by
reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of Lender's
security interest in any collateral is governed by
the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, the
term "UCC" shall mean the Uniform Commercial Code as
in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment,
perfection of priority and for purposes of
definitions related to such provisions.
     
"VANGUARD"  means Vanguard Airlines, Inc.

2.   GRANT OF SECURITY INTEREST.  As collateral
security for the 

<PAGE>
prompt and complete payment and performance when due
(whether at stated 
maturity, by acceleration or otherwise) of all the
Secured Obligations and in order to induce Lender to
arrange the Letter of Credit, to enter into the
Transaction Documents and to make the Reimbursement
Loans, each in accordance with the terms and
conditions thereof, Grantor hereby assigns, conveys,
mortgages, pledges, hypothecates and transfers to
Lender, and hereby grants to Lender, a security
interest in and to all of Grantor's right, title and
interest in, to and under the following (all of
which being hereinafter collectively called the
"COLLATERAL"):

(A)  All Accounts;

(B)  All Contracts;

(C)  The Deposit;

(D)  To the extent not otherwise included, all
Proceeds of each of the foregoing and all accessions
to, substitutions and replacements for, and rents,
profits and products of each of the foregoing.

3.   RIGHTS OF LENDER; COLLECTION OF ACCOUNTS.

(A)  Notwithstanding anything contained in this
Security Agreement to the contrary, Grantor
expressly agrees that it shall remain liable under
each of its Contracts to observe and perform all the
conditions and obligations to be observed and
performed by it thereunder and that it shall perform
all of its duties and obligations thereunder, all in
accordance with and pursuant to the terms and
provisions of each such Contract.  Lender shall not
have any obligation or liability under any Contract
by reason of or arising out of this Security
Agreement or the granting to Lender of a Lien
therein or the receipt by Lender of any payment
relating to any Contract pursuant hereto, nor shall
Lender be required or obligated in any manner to
perform or fulfill any of the obligations of Grantor
under or pursuant to any Contract, or to make any
payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the
sufficiency of any performance by any party under
any Contract, or to present or file any claim, or to
take any action to collect or enforce any
performance or the payment of any amounts which may
have been assigned to it or to which it may be
entitled at any time or times.

(B)  Lender authorizes Grantor to collect its
Accounts, provided that such collection is performed
in a prudent and businesslike manner, and Lender
may, 

<PAGE>
upon the occurrence and during the continuation of
any Event of Default and without notice, limit or
terminate said authority at any time.  If required
by Lender at any time during the continuation of any
Event of Default, any Proceeds, when first collected
by Grantor, received in payment of any such Account
or on account of any of its Contracts shall, subject
to the rights of MNB Bank under the MNB Merchant
Agreement and Boatmen's POS under the Boatmen's
Merchant Agreement, be promptly deposited by Grantor
in precisely the form received (with all necessary
endorsements) in a special bank account maintained
by Lender subject to withdrawal by Lender only, as
hereinafter provided, and until so turned over shall
be deemed to be held in trust by Grantor for and as
Lender's property and shall not be commingled with
Grantor's other funds or properties.  Such Proceeds,
when deposited, shall continue to be collateral
security for all of the Secured Obligations and
shall not constitute payment thereof until applied
as hereinafter provided.  Lender may, in its sole
discretion, apply all or a part of the funds on
deposit in said special account to the principal of
or interest on or both in respect of any of the
Secured Obligations in accordance with the
provisions of SECTION 7(D) hereof, and any part of
such funds which Lender elects not so to apply and
deem not required as collateral security for the
Secured Obligations shall be paid over from time to
time by Lender to Grantor.  If an Event of Default
has occurred and is continuing, at the request of
Lender, subject to the rights of MNB Bank under the
MNB Merchant Agreement, and Boatmen's POS under the
Boatmen's Merchant Agreement, Grantor shall deliver
all original and other documents evidencing and
relating to, the performance of service which
created such Accounts, including, without
limitation, all original orders, invoices, and
shipping receipts.

(C)  Lender may at any time, upon the occurrence and
during the continuation of any Event of Default
after first notifying Grantor of its intention to do
so, notify Account Debtors of Grantor, parties to
the Contracts of Grantor and obligors in respect of
Instruments and Chattel Paper of Grantor
constituting or relating to the Collateral, that the
Accounts and the right, title and interest of
Grantor in and under such Contracts, Instruments and
Chattel Paper have been assigned to Lender and that
payments shall be made directly to Lender.  Upon the
request of Lender, Grantor shall so notify such
Account Debtors, parties to such Contracts, obligors
in respect of such Instruments and such Chattel
Paper.  Upon the occurrence and during the
continuation of an Event of Default, Lender may, in
its name, or in the name of others communicate with
such Account Debtors, parties to such Contracts,
such Instruments and such Chattel Paper to verify
with such parties, to Lender's satisfaction, the
existence, amount and terms of any such Accounts,
Contracts, Instruments or Chattel Paper.
<PAGE>
(D)  Notwithstanding anything to the contrary set
forth in paragraphs (A) or (B) above or elsewhere
herein, Grantor shall, by execution and delivery of
the Notification of Assignment attached hereto as
Exhibit A, immediately notify Boatmen's POS of the
security interest granted hereby and (C) authorize
and direct Boatmen's POS, at such time as Lender
shall notify Boatmen's POS as to the occurrence of
an Event of Default hereunder, to pay and or
distribute to Lender all Collateral owned by, owed
to, payable to or otherwise distributable to Grantor
pursuant to the Boatmen's Merchant Agreement.  In
the event that the Company's credit card processing
function is transferred to MNB Bank, Grantor shall
cause to be executed a Notification of Assignment in
substantially the form attached hereto as Exhibit A
from MNB Bank.

4.   REPRESENTATIONS AND WARRANTIES.  Grantor hereby
represents and warrants to Lender that:

(A)  Except for the security interest granted to
Lender under this Security Agreement and other
Permitted Liens, Grantor is the sole legal and
equitable owner of each item of the Collateral in
which it purports to grant a security interest
hereunder, having good, marketable and insurable
title thereto free and clear of any and all Liens
other than Permitted Liens.

(B)  No effective security agreement, financing
statement, equivalent security or lien instrument or
continuation statement covering all or any part of
the Collateral exists, except such as may have been
filed by Grantor in favor of Lender pursuant to this
Security Agreement or such as relate to other
Permitted Liens.

(C)  This Security Agreement creates a legal and
valid security interest on and in all of the
Collateral in which Grantor now has rights, and all
filings and other actions necessary or desirable to
perfect and protect such security interest have been
duly taken.  Accordingly, Lender has a fully
perfected first priority security interest in all of
the Collateral in which Grantor now has rights,
subject only to the Permitted Liens.  This Security
Agreement will create a legal and valid and fully
perfected first priority security interest in the
Collateral in which Grantor later acquires rights,
when Grantor acquires those rights, subject only to
the Permitted Liens.

(D)  Grantor's chief executive office, principal
place of business, and the place where Grantor
maintains its records concerning the Collateral are
presently located at the addresses set forth on
SCHEDULE I attached hereto and incorporated herein
by this reference.  Grantor shall not, during the 
<PAGE>
continuance of this Security Agreement, change such
chief executive office or principal place of
business or remove or cause to be removed, except in
the ordinary course of Grantor's business, the
records relating to the Collateral from those
premises without prior written notice to Lender.

(E)  All Collateral of Grantor with respect to which
a security interest may be perfected by the secured
party's taking possession thereof, including,
without limitation, all Chattel Paper and
Instruments, except for any such Collateral which is
in the possession of Bank, are set forth on SCHEDULE
II attached hereto and incorporated herein by this
reference.  All action necessary or desirable to
protect and perfect such security interest in each
item set forth on SCHEDULE II , including,  without
limitation, the delivery of all originals thereof to
Lender, has been duly taken, except with respect to
those Chattel Paper, Instruments or other documents
constituting or relating to the Collateral
evidencing obligations of non-material amounts
payable to Grantor.  The security interest of Lender
in the Collateral listed on SCHEDULE II is prior in
right and interest to all other Liens and is
enforceable as such against creditors of and
purchasers from Grantor.

(F)  The amount represented by Grantor to Lender
from time to time as owing by each Account Debtor or
by all Account Debtors in respect of the Accounts of
Grantor shall at such time be the correct amount
actually and unconditionally owing by such Account
Debtors thereunder.

(G)  The current value of the Deposit is
approximately $1,750,000 and the estimated Gross
Exposure as of December 31, 1996 is $2,997,045.

(H)  The amount represented by Grantor to Lender
from time to time as the Deposits and as the Gross
Exposure shall at such time be the correct total of
such Amounts.

5.   COVENANTS.  Grantor covenants and agrees with
Lender that from and after the date of this Security
Agreement and until the Secured Obligations have
been performed and paid in full:

5.1  FURTHER ASSURANCES; PLEDGE OF INSTRUMENTS.  At
any time and from time to time, upon the written
request of Lender, and at the sole expense of
Grantor, Grantor shall promptly and duly execute and
deliver any and all such further instruments and
documents and take such further action as Lender may
reasonably deem desirable to obtain the full
benefits of this Security Agreement and of the
rights and powers herein granted, including, 
<PAGE>
without limitation, (a) using its best efforts to
secure all consents and approvals necessary or
appropriate for the assignment to Lender of any
Contract held by Grantor or in which Grantor has any
rights not heretofore assigned, (b) filing any
financing or continuation statements under the UCC
with respect to the security interests granted
hereby, and (c) transferring Collateral to Lender's
possession (if a security interest in such
Collateral can be perfected by possession).  Grantor
also hereby authorizes Lender to file any such
financing or continuation statement without the
signature of Grantor.  If any amount payable under
or in connection with any of the Collateral is or
shall become evidenced by any Instrument, such
Instrument, other than checks and notes received in
the ordinary course of business, shall be duly
endorsed in a manner satisfactory to Lender and,
subject to the rights of Boatmen's POS under the
Boatmen's Merchant Agreement and MNB under the MNB
Merchant Agreement, be delivered to Lender
immediately upon Grantor's receipt thereof.

5.2  MAINTENANCE OF RECORDS.  Grantor shall keep and
maintain at its own cost and expense satisfactory
and complete records of the Collateral, including,
without limitation, a record of all payments
received and all credits granted with respect to the
Collateral and all other dealings with the
Collateral.  Grantor shall mark its books and
records pertaining to the Collateral to evidence
this Security Agreement and the security interests
granted hereby.  All Chattel Paper shall be marked
with the following legend:  "This writing and 
the obligations evidenced or secured hereby are
subject to the security interest of Hambrecht &
Quist California."

5.3  INDEMNIFICATION.  In any suit, proceeding or
action brought by or against Lender relating to any
Account or Contract, or any Chattel Paper,
Instrument or Document constituting or relating to
the Collateral, for any sum owing thereunder, or to
enforce any provision of any Account or Contract, or
any Chattel Paper, Instrument or Document
constituting or relating to the Collateral, Grantor
shall save, indemnify and keep Lender harmless from
and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of
the obligor thereunder arising out of a breach by
Grantor of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at
any time owing to, or in favor of, such obligor or
its successors from Grantor, and all such
obligations of Grantor shall be and remain
enforceable against and only against Grantor and
shall not be enforceable against Lender.

5.4  COMPLIANCE WITH TERMS OF ACCOUNTS, ETC.  In all
material respects, Grantor shall perform and comply
with all obligations in respect of the Accounts and
Contracts and in respect to any Chattel Paper, 
<PAGE>
Documents and Instruments constituting or relating
to the Collateral.

5.5  LIMITATION ON LIENS ON COLLATERAL.  Grantor
shall not create, permit or suffer to exist, and
shall defend the Collateral against and take such
other action as is necessary to remove, any Lien on
the Collateral, except (a) Permitted Liens and
(b) the Lien granted to Lender under this Security
Agreement.  Grantor shall further defend the right,
title and interest of Lender in and to any of
Grantor's rights under the Contracts and Accounts or
in the Deposit or under Chattel Paper, Documents,
and Instruments constituting or relating to the
Collateral, and in and to the Proceeds thereof
against the claims and demands of all Persons
whomsoever.

5.6  LIMITATIONS ON MODIFICATIONS OF ACCOUNTS, ETC. 
Upon the occurrence and during the continuation of
any Event of Default, Grantor shall not, without
Lender's prior written consent, (a) grant any
extension of the time of payment of any of the
Accounts or amounts due under any Contract
(including, without limitation, amounts due from the
Deposit) or under any Chattel Paper, Instruments or
Document constituting or relating to the Collateral,
(b) compromise, compound or settle the same for less
than the full amount thereof, (c) release, wholly or
partly, any Person liable for the payment thereof,
or (d) allow any credit or discount whatsoever
thereon other than trade discounts granted in the
ordinary course of business of Grantor.

5.7  TAXES, ASSESSMENTS, ETC.  Grantor shall pay
promptly when due all property and other taxes,
assessments and government charges or levies imposed
upon, and all claims (including claims for labor,
materials and supplies) against, the Collateral
except to the extent the validity thereof is being
contested in good faith and adequate reserves are
being maintained in connection therewith.

5.8  LIMITATIONS ON DISPOSITIONS.  Grantor shall
keep the records regarding the Collateral and any
Collateral in possession of Grantor separate and
identifiable from other property located on the same
premises as the Collateral and Grantor shall not
sell, lease, transfer or otherwise dispose of any of
the Collateral, or attempt or contract to do so.

5.9  FURTHER IDENTIFICATION OF COLLATERAL.  Grantor
shall, if so requested by Lender, furnish to Lender,
as often as Lender shall reasonably request,
statements and schedules further identifying and
describing the Collateral and such other reports in
connection with the Collateral as Lender may
reasonably request, all in reasonable detail.

5.10 NOTICES.  Grantor shall advise Lender promptly,
in reasonable detail, of (a) any material Lien,
other than Permitted Liens, attaching to or asserted
against any of the Collateral, (b) any material
change in the composition of the Collateral and
(c) the occurrence of any other event which would
have a material adverse effect on the aggregate
value of the Collateral or on the Lien created
hereunder.

5.11 RIGHT OF INSPECTION AND AUDIT.

(A)  Upon reasonable notice to Grantor (unless an
Event of Default has occurred and is continuing, in
which case no notice is necessary), Lender shall at
all times have full and free access during normal
business hours to all the books and records and
correspondence of Grantor, and Lender or any agents
or representatives of Lender may examine the same,
take extracts therefrom and make photocopies
thereof, and Grantor agrees to render to Lender, at
Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with
regard thereto.  Upon reasonable notice to Grantor
(unless an Event of Default has occurred and is
continuing, in which case no notice is necessary),
Lender and its agents and  representatives shall
also have the right to enter into and upon any
premises where any of records regarding the
Collateral are located for the purpose of conducting
audits and making test verifications of the Accounts
in any manner and through any medium that it
considers advisable, and Grantor agrees to furnish
all such assistance and information as Lender may
reasonably require in connection therewith. 
Grantor, at its own expense, shall cause certified
independent public accountants, reasonably
satisfactory to Lender, to prepare and deliver to
Lender the results of and any test verification of
Grantor's Accounts made or observed by such
accountants when and if such verification is
conducted.

(B)  Lender shall have all rights of Grantor to
audit, copy or make extracts of the records of
Boatmen's POS or MNB Bank as are specified under the
respective agreements.

5.12 CONTINOUS PERFECTION.  Grantor shall not change
its name, identity or corporate structure in any
manner which might make any financing or
continuation statement filed in connection herewith
seriously misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable
provision of the UCC) unless Grantor shall have
given Lender at least thirty (30) days' prior
written notice thereof and shall have taken all
action (or made arrangements to take such action
substantially simultaneously with such change if it
is impossible to take such action in advance)
necessary or reasonably requested by Lender to amend
such financing statement or 
<PAGE>
continuation statement so that it is not seriously
misleading.

5.13 Grantor shall provide, or shall cause Boatmen's
POS or MNB Bank to provide, to Lender such reports
and notices as are required to be sent, or may be
sent, by Boatmen's POS or MNB to Grantor with
respect to the Accounts, the Deposit, the Gross
Exposure, or as otherwise are required to be sent or
may be made available to Grantor pursuant to the
Boatmen's Merchant Agreement or MNB Merchant
Agreement.

5.14 Grantor may not enter into any amendment to the
Boatmen's Merchant Agreement or the MNB Merchant
Agreement,  without the written consent of Lender,
except where such amendment only relates to the fees
and charges to be paid to Boatmen's POS or MNB by
Vanguard.

6.   LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.

(A)  Grantor hereby irrevocably constitutes and
appoints Lender, and any officer or agent thereof,
with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power
and authority in the place and stead of Grantor and
in the name of Grantor or in its own name, from time
to time at Lender's discretion, for the purpose of
carrying out the terms of this Security Agreement,
to take any and all appropriate action and to
execute and deliver any and all documents and
instruments which may be necessary or desirable to
accomplish the purposes of this Security Agreement
and, without limiting the generality of the
foregoing, hereby gives Lender the power and right,
on behalf of Grantor, without notice to or assent by
Grantor, to do the following:

(I)  to ask, demand, collect, receive and give
acquittances and receipts for any and all monies due
or to become due under any Collateral and, in the
name of Grantor in its own name or otherwise to take
possession of, endorse and collect any checks,
drafts, notes, acceptances or other Instruments for
the payment of monies due under any Collateral and
to file any claim or to take or commence any other
action or proceeding in any court of law or equity
or otherwise deemed appropriate by Lender for the
purpose of collecting any and all such monies due
under any Collateral whenever payable;

(II) to pay or discharge any Liens, including,
without limitation, any tax lien, levied or placed
on or threatened against the Collateral, to effect
any repairs or any insurance called for by the terms
of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof;
and
<PAGE>
(III)    (1) direct any person liable for any
payment under or in respect of any of the Collateral
to make payment of any and all monies due or to
become due thereunder directly to Lender or as
Lender shall direct, (2) receive payment of any and
all monies, claims and other amounts due or to
become due at any time arising out of or in respect
of any Collateral, (3) sign and endorse any
invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in
connection with Accounts and other Instruments and
Documents constituting or relating to the
Collateral, (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any
other right in respect of any Collateral, (5) defend
any suit, action or proceeding brought against
Grantor with respect to any Collateral, (6) settle,
compromise or adjust any suit, action or proceeding
described above and, in connection therewith, give
such discharges or releases as Lender may deem
appropriate, and (7) sell, transfer, pledge, make
any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as
though Lender were the absolute owner thereof for
all purposes, and to do, at Lender's option and
Grantor's expense, at any time, or from time to
time, all acts and things which Lender may
reasonably deem necessary to protect, preserve or
realize upon the Collateral and Lender's Lien
therein in order to effect the intent of this
Security Agreement, all as fully and effectively as
Grantor might do.

(B)  Lender agrees that, except upon the occurrence
and during the continuation of an Event of Default,
it shall not exercise the power of attorney or any
rights granted to Lender pursuant to this SECTION 6. 
Grantor hereby ratifies, to the extent permitted by
law, all that said attorney shall lawfully do or
cause to be done by virtue hereof.  The power of
attorney granted pursuant to this SECTION 6 is a
power coupled with an interest and shall be
irrevocable until the Secured Obligations are paid
and performed in full.

(C)  The powers conferred on Lender hereunder are
solely to protect Lender's interests in the
Collateral and shall not impose any duty upon it to
exercise any such powers.  Lender shall be
accountable only for amounts that it actually
receives as a result of the exercise of such powers
and neither it nor any of its officers, directors,
employees, agents or representatives shall be
responsible to Grantor for any act or failure to
act, except for its own gross negligence or willful
misconduct.

(D)  Grantor also authorizes Lender, at any time and
from time to time upon the occurrence and during the
continuation of any Event of Default, to 

<PAGE>
(i) communicate in its own name with any party to
any Contract with regard 
to the assignment of the right, title and interest
of Grantor in and under the Contracts hereunder and
other matters relating thereto and (ii) execute, in
connection with the sale of Collateral provided for
in SECTION 7 hereof, any endorsements, assignments
or other instruments of conveyance or transfer with
respect to the Collateral.

(E)  If Grantor fails to perform or comply with any
of its agreements contained herein and Lender, as
provided for by the terms of this Security
Agreement, shall perform or comply, or otherwise
cause performance or compliance, with such
agreement, the reasonable expenses, including
attorneys' fees, of Lender incurred in connection
with such performance or compliance, together with
interest thereon at the rate then in effect in
respect of the Reimbursement Loans, shall be payable
by Grantor to Lender on demand and shall constitute
Secured Obligations secured hereby.

7.   RIGHTS AND REMEDIES UPON DEFAULT.

(A)  If any Event of Default shall occur and be
continuing, Lender may exercise in addition to all
other rights and remedies granted to it under this
Security Agreement, the Boatmen's Merchant
Agreement, MNB Merchant Agreement, the other Loan
Documents and under any other instrument or
agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a
secured party under the UCC.  Without limiting the
generality of the foregoing, Grantor expressly
agrees that in any such event Lender, without demand
of performance or other demand, advertisement or
notice of any kind (except the notice specified
below of time and place of public or private sale)
to or upon Grantor or any other person (all and each
of which demands, advertisements and notices are
hereby expressly waived to the maximum extent
permitted by the UCC and other applicable law), may
forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or
options to purchase or sell or otherwise dispose of
and deliver said Collateral (or contract to do so),
or any part thereof, in one or more parcels at
public or private sale or sales, at any exchange or
broker's board or at any of Lender's offices or
elsewhere at such prices as it may deem best, for
cash or on credit or for future delivery without
assumption of any credit risk.  Lender shall have
the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any
part of said Collateral so sold, free of any right
or equity of redemption, which equity of 

<PAGE>
redemption Grantor hereby releases.  Grantor further
agrees, at Lender's request, to assemble the
Collateral and make it available to Lender at places
which Lender shall reasonably select, whether at
Grantor's premises or elsewhere.  Lender shall apply
the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale as
provided in SECTION 7(D) hereof, Grantor remaining
liable for any deficiency remaining unpaid after
such application, and only after so paying over such
net proceeds and after the payment by Lender of any
other amount required by any provision of law,
including Section 9-504(1)(c) of the UCC, need
Lender account for the surplus, if any, to Grantor. 
To the maximum extent permitted by applicable law,
Grantor waives all claims, damages, and demands
against Lender arising out of the repossession,
retention or sale of the Collateral except such as
arise out of the gross negligence or willful
misconduct of Lender.  Grantor agrees that Lender
need not give more than ten (10) days' notice (which
notification shall be deemed given if given in
accordance with SECTION 9.3 of the Reimbursement
Agreement) of the time and place of any public sale
or of the time after which a private sale may take
place and that such notice is reasonable
notification of such matters.  Grantor shall remain
liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is
entitled, Grantor also being liable for the
reasonable fees of any attorneys employed by Lender
to collect such deficiency.

(A)  Grantor also agrees to pay all fees, costs and
expenses of Lender, including, without limitation,
reasonable attorneys' fees, incurred in connection
with the enforcement of any of its rights and
remedies hereunder.

(B)  Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent
permitted by applicable law) of any kind in
connection with this Security Agreement or any
Collateral.

(C)  The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral
shall be distributed by Lender in the following
order of priorities:

               FIRST,to Lender in an amount
          sufficient to pay in full the
          reasonable costs of Lender in
          connection with such sale,
          disposition or other realization,
          including all fees, costs, expenses,
          liabilities and advances incurred or
          made by Lender in connection
          therewith, including, without
          limitation, reasonable attorneys'
          fees;

<PAGE>
               SECOND, to Lender in an amount
          equal to the then unpaid principal of
          and accrued interest and prepayment
          premiums, if any, on the Secured
          Obligations;

               THIRD, to Lender in an amount
          equal to any other Secured
          Obligations which are then unpaid;
          and

               FINALLY, upon payment in full of
          all of the Secured Obligations, to
          Grantor or its representatives or as
          a court of competent jurisdiction may
          direct.

8.   LIMITATION ON LENDER'S DUTY IN RESPECT OF
COLLATERAL.  Lender shall be deemed to have acted
reasonably in the custody, preservation and
disposition of any of the Collateral if it takes
such action as Grantor requests in writing, but
failure of Lender to comply with any such request
shall not in itself be deemed a failure to act
reasonably, and no failure of Lender to do any act
not so requested shall be deemed a failure to act
reasonably.

9.   REINSTATEMENT.  This Security Agreement shall
remain in full force and effect and continue to be
effective should any petition be filed by or against
Grantor for liquidation or reorganization, should
Grantor become insolvent or make an assignment for
the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part
of Grantor's property and assets, and shall continue
to be effective or be reinstated, as the case may
be, if at any time payment and performance of the
Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by
any obligee of the Secured Obligations, whether as a
"voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance
had not been made.  In the event that any payment,
or any part thereof, is rescinded, reduced, restored
or returned, the Secured Obligations shall be
reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or
returned.

10.  MISCELLANEOUS.

10.1 NOTICES.  Any notice or other communication
hereunder to any party shall be addressed and
delivered (and shall be deemed given) in accordance
with Section 9.3 of the Reimbursement Agreement.

10.2 SEVERABILITY.  Any provision of this Security
Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in
any other jurisdiction.

10.3 HEADINGS.  The various headings in this
Security Agreement are inserted for convenience only
and shall not affect the meaning or interpretation
of this agreement or any provisions hereof.

10.4 NO WAIVER; CUMALITIVE REMEDIES.

(A)  Lender shall not by any act, delay, omission or
otherwise be deemed to have waived any of its
respective rights or remedies hereunder, nor shall
any single or partial exercise of any right or
remedy hereunder on any one occasion preclude the
further exercise thereof or the exercise of any
other right or remedy.

(B)  The rights and remedies hereunder provided are
cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights
and remedies provided by law.

(C)  None of the terms or provisions of this
Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly
executed by Grantor and Lender.

10.5 TERMINATION OF THIS SECURITY AGREEMENT. 
Subject to SECTION 9 hereof, this Security Agreement
shall terminate upon the payment and performance in
full of the Secured Obligations.

10.6 SUCCESSORS AND ASSIGNS.  This Security
Agreement and all obligations of Grantor hereunder
shall be binding upon the successors and assigns of
Grantor, and shall, together with the rights and
remedies of Lender hereunder, inure to the benefit
of Lender, any future holder of any Reimbursement
Loan Note executed by Grantor in connection with the
Reimbursement Agreement and their respective
successors and assigns.  No sales of participations,
other sales, assignments, transfers or other
dispositions of any agreement governing or
instrument evidencing the Secured Obligations or any
portion thereof or interest therein shall in any
manner affect the Lien granted to Lender hereunder.
<PAGE>
10.7 FURTHER IDEMNIFICATION.  Grantor agrees to pay,
and to save Lender harmless from, any and all
liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other
similar taxes which may be payable or determined to
be payable with respect to any of the Collateral or
in connection with any of the transactions
contemplated by this Security Agreement.

10.8 GOVERNING LAW.  In all respects, including all
matters of construction, validity and performance,
this Security Agreement and the Secured Obligations
arising hereunder shall be governed by, and
construed and enforced in accordance with, the laws
of the State of California applicable to contracts
made and performed in such state, without regard to
the principles thereof regarding conflict of laws.

10.9 COUNTERPARTS.  This Security Agreement may be
executed in any number of counterparts, each of
which when so delivered shall be deemed an original,
but all such counterparts shall constitute but one
and the same instrument.  Each such agreement shall
become effective upon the execution of a counterpart
hereof or thereof by each of the parties hereto and
telephonic notification thereof has been received by
Grantor and Lender.


              [Intentionally Left Blank]



















PAGE
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has
caused this Security Agreement to be executed and
delivered by its duly authorized officer on the date
first set forth above.

GRANTOR                  VANGUARD AIRLINES, INC.



                         By:                         

                         Printed Name:               

                         Title:                      




Accepted and acknowledged by:

HAMBRECHT & QUIST, CALIFORNIA,
a wholly owned subsidiary of
Hambrecht & Quist Group



By:                                

Printed Name:                      

Title:                                  











PAGE
<PAGE>
SCHEDULE I

LOCATION OF GRANTOR'S CHIEF EXECUTIVE OFFICE
PRINCIPAL PLACE OF BUSINESS
AND RECORDS PERTAINING TO COLLATERAL

CHIEF EXECUTIVE OFFICE:

30 N.W. Rome Circle- Mezzanine Level
Kansas City International Airport
Kansas City, MO 64153


RECORDS PERTAINING TO COLLATERAL

30 N.W. Rome Circle- Mezzanine Level
Kansas City International Airport
Kansas City, MO 64153


PRINCIPAL PLACE OF BUSINESS:

30 N.W. Rome Circle- Mezzanine Level
Kansas City International Airport
Kansas City, MO 64153









      









PAGE
<PAGE>
SCHEDULE II
LIST OF COLLATERAL DELIVERED TO LENDER




NONE
















  

    


















PAGE
<PAGE>
SCHEDULE III

PERMITTED LIENS
NONE


     





































<PAGE>